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2001 DIGILAW 846 (PNJ)

Whirlpool Of India Ltd. v. Union Of India

2001-08-13

ASHUTOSH MOHUNTA, JAWAHAR LAL GUPTA

body2001
Judgment Jawahar Lal Gupta, J. 1. Is the action of the authorities in requiring the petitioner to declare the Maximum Retail Price on the cartons containing Refrigerators, arbitrary and illegal? This is the short question that arises in this case. 2. The petitioner is a company. It manufactures and markets Refrigerators and Washing Machines etc. in its factory at Faridabad. 3. On March 1, 2000, the Government of India issued a notification under Section 4A of the Central Excise Act, 1944 (hereinafter referred to as the Excise Act) specifying the goods to which the provisions of....sub-section (2) shall apply.... The Refrigerators have been mentioned at Sr. No. 48. The implication of the notification is that the Maximum Retail Price of the goods has to be declared on the package and the excise duty is charged on the retail price declared on such goods less amount of abatement.... 4. The petitioner alleges that from the date of issue of the notification, it has started paying and depositing Central Excise duties on the maximum retail price State-wise as applicable for the Refrigerators.... However, the respondents are harassing the petitioner (by) requiring them (it) to print the MRP (Maximum Retail Price) on the outer cartons of the Refrigerators manufactured by it. It requested the respondents to allow it not to print/indicate the retail price on the cartons of the Refrigerator. Having received no reply, it has approached this Court through the present writ petition. 5. The petitioners case is that the Refrigerators are not a packaged commodity. The provisions of the Standards of Weights and Measures Act, 1976 (hereinafter referred to as the 1976 Act) or the Rules made thereunder are not applicable. The issue is already pending in various High Courts of the country. Even interim relief has been granted to it. Thus, it cannot be required to declare on the package the retail sale price of such goods. On this basis, the petitioner prays that the notification dated March 1, 2000, a copy of which has been produced as Annexure P. 9 with the writ petition be quashed in so far as it includes the Refrigerators and that the respondents be restrained from enforcing the requirement of declaring maximum retail price on the Refrigerator.... and from taking any coercive measures ....including seizure of Refrigerators for not declaring the maximum retail price... and from taking any coercive measures ....including seizure of Refrigerators for not declaring the maximum retail price... In response to the notice of motion, a written statement has been filed on behalf of the respondents by the Assistant Commissioner, Central Excise, Faridabad. The claim made by the petitioner has been controverted. The respondents maintain that the notification dated March 1, 2000 has been issued after due consideration. The provisions of the Standards of Weights and Measures Act, 1976 are applicable to the products of the petitioner. A Refrigerator is sold in a package of polythene cover, thermocol, hardboard cartons etc. Consequently, it falls in the category of a prepacked commodity. The facility of physical verification of Refrigerator at the dealers premises cannot mean an exclusion from the category of pre-packed commodity. Once any article is put in a package, it is covered under the provisions of the 1976 Act. A Refrigerator is an electrical appliance. The details as required under the Act or the Rules and particularly under Rule 12(5)(f) viz. the voltage, wattage and output have also to be declared. On these premises, the respondents pray that the writ petition should be dismissed. 6. Mr. M.L. Sarin, learned Counsel for the petitioner contended that a Refrigerator is not a pre-packed item. Thus, the provisions of the 1976 Act are not attracted. Resultantly, the action of the respondents in including the Refrigerators in the notification dated March 1, 2000 cannot be sustained. He emphasised that a similar claim of the petitioner has been entertained by the Honble High Courts of Kerala, Madras and Bombay. Thus, even this Court should allow the petitioners claim. Mr. Rajesh Gumber who appeared for the respondents maintained that the action is legal and valid. 7. The questions that arise for consideration are :- (i) Is the action of the respondent-Union of India in issuing the notification dated March 1, 2000 under Section 4A of the Central Excise Act, 1944 and in requiring the petitioner to declare the maximum retail price on the packing of the Refrigerators, arbitrary and illegal? (ii Is this Court bound to stay the operation of the notification dated March 1, 2000 and to direct the respondents to desist from implementing its requirements on the ground that writ petitions are pending in different High Courts wherein certain directions have been given? Reg : (i) 8. Mr. (ii Is this Court bound to stay the operation of the notification dated March 1, 2000 and to direct the respondents to desist from implementing its requirements on the ground that writ petitions are pending in different High Courts wherein certain directions have been given? Reg : (i) 8. Mr. Sarin contended that a Refrigerator is not sold in a packaged form. The provisions of the 1976 Act or the Rules framed thereunder are not applicable. Thus, the action of the respondents in including Refrigerators in the notification dated March 1, 2000 issued under Section 4A of the Excise Act, is illegal. Is it so? 9. First the 1976 Act. Why was it enacted? What was the purpose? 10. In view of the rapid advances made in the field of science and technology, a practical system of units of weights and measures, suitable for adoption for all the signatories to the Metre Convention was evolved. India is a signatory to the Convention. After the convention, the Central Government had constituted a committee. As a result of the recommendations made by the Committee, the Standards of Weights and Measures Act, 1956 was replaced by the 1976 Act. The enactment was inter alia intended to provide for consumer protection in respect of packaged commodities by providing, in pursuance of the recommendations of the International Organisation of Legal Metrology, for the proper indication on the package of net quantity by weight, measures or number, the identity of the commodity contained therein, the name of the manufacturer, and what is more important, the price of the package. In respect of certain products like the medicines or eatables, the dates of manufacture as well as expiry were also required to be indicated. 11. The Act, as is clear from a perusal of the declared aims and objects, is intended to protect the consumer. It requires the Central Government to lay down the standards and supply these to the State Governments for implementation. The Government of India has to appoint a Director of Legal Metrology as also the other officers for, carrying out the duties conferred or imposed on them by or under this Act. The officers have the power of inspection and forfeiture. A violation of the Act entails penalty. 12. The Government of India has to appoint a Director of Legal Metrology as also the other officers for, carrying out the duties conferred or imposed on them by or under this Act. The officers have the power of inspection and forfeiture. A violation of the Act entails penalty. 12. For the purposes of this case, we are concerned with the provisions relating to the commodities which are sold in packaged form. Section 2(b) defines a packaged commodity to mean a commodity packed, whether in any bottle, tin, wrapper or otherwise , in units suitable for sale, whether wholesale or retail. Chapter IV contains detailed provisions in respect of such commodities. The information required to be declared on a packaged commodity is given in Section 39. It inter alia provides as under :- 39. Quantities and origin of commodities in packaged form to be declared - (1) No person shall - XX XX XX (c) offer, expose or possess for sale any commodity in packaged form to which this Part applies unless such package bears thereon or on a label securely attached thereto a definite, plain and conspicuous declaration, made in the prescribed manner, of - (i) the identity of the commodity in the package; (ii) the net quantity, in terms of the standard unit of weight or measure of the commodity in the package; XX XX XXX (iv) the unit sale price of the commodity in the package; and (v) the sale price of the package. Explanation - In this sub-section, the expression unit sale price means the price according to such unit or weight, measure or number as may be prescribed. 13 A perusal of the above provisions shows that whenever a commodity is contained in any form of packing, a wrapper or otherwise, the buyer should be able to get complete information regarding the identity, quantity in terms of weight or measure and the price etc. by a mere look at the item. It should not be necessary for the buyer to make inquiries or to open the carton to ascertain the specifications or the price. Similarly, the authorities under the Act would be in a position to check whether the goods conform to the declaration made on the wrapper or packing. The purpose is obviously to protect the consumer. In case the goods do not conform to the declared standards, the manufacturer can face trouble. Similarly, the authorities under the Act would be in a position to check whether the goods conform to the declaration made on the wrapper or packing. The purpose is obviously to protect the consumer. In case the goods do not conform to the declared standards, the manufacturer can face trouble. 14. Mr. Sarin contended that a Refrigerator is not a packaged commodity. Is it so? 15. The petitioners own case in paragraph 3 of the petition is that  the Refrigerators are packed in polythene covers, thermocol etc. and placed in hard-board cartons.... . Mr. Sarin says that this packing is done to protect the goods from being damaged in transit from the Factory at Faridabad to the Warehouse and thereafter from the Warehouse to the distributor/dealers premises. Once the products are delivered to a dealer, it is placed in an open condition... On a perusal of these averments, it is clear that the petitioner wraps the Refrigerators in three wrappers viz. a polythene cover, thermocol and a hard-board carton. It may be that the purpose of packing is to protect the Refrigerators from damage during transit. But that is the primary purpose of packing in every case. However, in view of the petitioners own pleadings, it cannot be said that the goods manufactured by the petitioner do not fall within the mischief of Sections 2(b) & 39. In this situation, the very basis of the petitioners claim is non-existent. 16. There is another aspect of the matter. Section 33 of the 1976 Act empowers the Central Government to frame Rules. In exercise of this power, the Central Government has framed the Standards of Weights and Measures (packaged commodities) Rules, 1977. Rule 2(1) inter alia provides that a pre-packed commodity with its grammatical and cognate expressions, means a commodity or article or articles which without the purchaser being present, is placed in a package of whatever nature, so that the quantity of the product contained therein has a pre- determined value and such value cannot be altered without the package or its lid or cap, as the case may be, being opened or undergoing a perceptible modification and the expression package, wherever it occurs, shall be construed as a package containing a pre-packed commodity. An explanation was added to this provision on January 17, 1992. An explanation was added to this provision on January 17, 1992. It reads as under :- "Explanation (1) - Where, by reason merely of the opening of a package no alteration is caused to the value, quantity, nature or characteristic of the commodity contained therein, such commodity shall be deemed, for the purposes of these rules, to be a pre-packed commodity, for example, an electric bulb or fluorescent tube is a prepacked commodity, even though the package containing it is required to be opened for testing the commodity. 17. The illustration of an electric bulb as contained in the explanation is clearly indicative of the legislative intent. Admittedly, an electric bulb is merely wrapped in a sheet of corrugated paper. It can be taken out and tested. Every buyer does so. Yet, it is treated as a pre-packed commodity. In our view, a Refrigerator is not different in any manner. 18. It is undoubtedly true that a customer who goes to a dealer to buy a Refrigerator shall check it before he pays the price. He might even test it. For this purpose, the dealer shall have to necessarily remove the packing. However, this is of no consequence. The Act postulates that the goods can be inspected by the Director or any person authorised by him even while the goods are lying in any premises or are in the course of transportation from one State to another. A specific provision in this behalf is contained in Section 29. Section 30 further provides for forfeiture etc. 19. In the present case, it is the admitted position that the petitioner actually transfers the goods from the factory to the Warehouse and/or to the dealer. The goods can be inspected during the course of transportation or while these are lying in the warehouse or any other premises. How would the carton containing a Refrigerator be different from a card-board box containing bottles of medicines or ampules of injection? In no way. In fact, it was not even suggested on behalf of the petitioner that the goods are not in a packaged form at the time of transport etc. The position cannot change by the mere fact that the dealer has to open the carton and exhibit the contents for the convenience of the customer at the time of sale. In fact, it was not even suggested on behalf of the petitioner that the goods are not in a packaged form at the time of transport etc. The position cannot change by the mere fact that the dealer has to open the carton and exhibit the contents for the convenience of the customer at the time of sale. Thus, the declaration as required under the provisions of the Act and the Rules has to be made. 20. Mr. Sarin contended that the notification dated March 1, 2000 by which the Refrigerators have been included at Sr. No. 48 is illegal. Is it so? 21. The Excise Act was promulgated to consolidate and amend the law relating to Central duties of excise on goods manufactured or produced.... Chapter II deals with the levy and collection of duty. In the present case, we are concerned with the notification issued under Section 4A of the Act. This provision is in the following terms :- 4A. Valuation of excisable goods with reference to retail sale price. - (1) The Central Government may, by notification in the Official Gazette, specify any goods, in relation to which it is required, under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods to which the provisions of sub-section (2) shall apply. (2) Where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to value, then notwithstanding anything contained in section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette. (3) The Central Government, may, for the purpose of allowing any abatement under sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods. (3) The Central Government, may, for the purpose of allowing any abatement under sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods. (4) If any manufacturer removes from the place of manufacture any excisable goods specified under sub-section (1) without declaring the retail sale price of such goods on the packages, or declares a retail sale price which does not constitute the sole consideration for such sale, or tampers with, obliterates or alters any such declaration made on the packages after removal, such goods shall be liable to confiscation. Explanation 1 . - For the purposes of this section, retail sale price means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes local or otherwise, freights, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like, as the case may be, and the price is the sole consideration for such sale. Explanation 2. - (a) Where on the package of any excisable goods more than one retail sale price is declared, the maximum of such retail sale price shall be deemed to be the retail sale price for the purposes of this section. (b) Where different retail sale prices are declared on different packages for the sale of any excisable goods in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of valuation of the excisable goods intended to be sold in the area to which the retail sale price relates. 22. A perusal of the above provision shows that in case of excisable goods which are covered under the provisions of the 1976 Act or the Rules made thereunder, the Central Government can issue a notification in the Official Gazette and then the excise duty is levied on the basis of the retail price minus the amount of abatement allowed by the Government. For this purpose, the Central Government can even take into consideration the amount of sales tax etc. and the freight charges. By virtue of Explanation 1, the retail sale price is deemed to be the maximum retail price declared on the package. 23. For this purpose, the Central Government can even take into consideration the amount of sales tax etc. and the freight charges. By virtue of Explanation 1, the retail sale price is deemed to be the maximum retail price declared on the package. 23. It is in exercise of the power under Section 4A of the Excise Act that the impugned notification has been issued. In view of our conclusion that the provisions of the 1976 Act and the Rules are applicable to the products produced by the petitioner, there appears to be no infirmity in the notification. 24. It deserves notice that the petitioner has fixed different rates of maximum retail price for different areas. By way of illustration, it may be mentioned that in case of Refrigerators, the petitioner has as many as 9 models. One of these is described as 310 LTR Flexigerator. The maximum retail price appears to range from Rs. 14251/- in Delhi to Rs. 16093/- in Madras. The variation in price may be justifiable. However, unless the price is declared on the carton in the prescribed form, it would be impossible for the authority at the factory premises to charge the excise duty. In the absence of a clear declaration in the prescribed form, the petitioner may be able to clear the goods from the factory premises on the pretext that the consignment is going to one State and thereafter carry it to any other State. The impugned notification seeks to eliminate such a possibility. As a result, the excise duty is chargeable on the basis of the maximum retail price declared by the petitioner as mentioned in the notification. The goods are cleared on payment of the required excise duty. These can be inspected in the Warehouse or while in transit and also in any other premises. The action is in strict conformity with the provisions of Section 4A. 25. In view of the above, we answer the first question as posed above against the petitioner. It is held that the action of the respondents in requiring the petitioner to declare the maximum retail price on the packing of the Refrigerators or in issuing the notification dated March 1, 2000, a copy of which is at Annexure P. 9 with the writ petition, is not arbitrary, illegal or unfair. Reg : (ii) 26. Mr. Sarin raised a curious argument. Reg : (ii) 26. Mr. Sarin raised a curious argument. He submitted that the issue as raised in this petition is already pending consideration before different High Courts. Even interim orders of stay have been issued. These are binding on the respondents. Thus, in view of Section 10 of the Code of Civil Procedure, the proceedings in the present writ petition have to be stayed. 27. Undoubtedly, the principles embodied in the provisions of the Code of Civil Procedure are normally followed by the courts in proceedings under Article 226 of the Constitution. These ensure uniformity. 28. What is the principle behind Section 10? In simple words, the provision debars the court from trying a dispute which is already pending between the same parties in earlier proceedings before the same or another court in the country. The proceedings in the subsequent suit are required to be stayed. 29. According to the petitioner, the issue is already pending before the High Courts of Bombay, Kerala and Madras. That being so the proceedings in the present writ petition should be stayed. As a result, no order can be passed. 30. It deserves notice that the petitioner itself has instituted the proceedings in different High Courts including the present proceedings in this Court. If the argument as raised is accepted, the proceedings should have been stayed at the threshold. However, the petitioners claim is that the notice of motion having been issued and the interim stay having been granted, further proceedings should be stayed. This plea, if accepted, would be grossly unfair. Still further, it deserves notice that all the parties to the dispute are not common. Respondent No. 2 is admittedly not a party in the proceedings pending before the other High Courts. Thus, in the circumstances of this case, we are unable to accept the contention that the proceedings are between the same parties or that the hearing of the writ petition deserves to be stayed at the present stage. 31. Mr. Sarin then contended that the writ petitions having been admitted in different High Courts, even this Court should admit the petition and grant stay as prayed for by the petitioner. He submitted that this course of action would be just and appropriate. 32. We find no warrant for the contention. 31. Mr. Sarin then contended that the writ petitions having been admitted in different High Courts, even this Court should admit the petition and grant stay as prayed for by the petitioner. He submitted that this course of action would be just and appropriate. 32. We find no warrant for the contention. It is undoubtedly true that from a perusal of the documents produced by the petitioner, the matter appears to be pending in certain High Courts. It is also true that the interim orders passed by their Lordships shall be binding on the respondents in those petitions. However, this fact cannot ipso facto imply that every writ petition filed in a different High Court against the same or other party has to be admitted and the operation of the impugned notification has to be stayad throughout the country. This submission, if accepted, can lead to injustice. While considering the contending claims of different litigants, the Court has to keep in view the interests of the Industry as well as the Revenue. Delay in decision can often lead to injustice. We have heard the matter at reasonable length. In the circumstances of the case, we find no ground to put the petition in a cold storage and to allow the petitioner the freedom that it seeks. Resultantly, we reject the submission. 33. Lastly, it was contended that there is no complaint against the petitioner. Thus, the relief as sought should be granted. 34. The submission is misconceived. The petitioner has come with a complaint against the action of the authorities. The merits have been examined. It has failed to substantiate its claim. Thus, the relief as prayed for cannot be granted. 35. In view of the above, we answer even the second question against the petitioner. It is held that even though, theprima facie view taken by different High Courts is entitled to full respect, this Court is not debarred from hearing and deciding the petition. 36. Before parting with the case, we may notice that Mr. Rajesh Gumber, learned Counsel for the respondents had pointed out that the petitioner has claimed that the provisions of the 1976 Act are not applicable. Yet, none of the authorities under the 1976 Act has been impleaded as a party. The Excise Department which has been impleaded in the present case is merely carrying out its obligations under the law. 37. Yet, none of the authorities under the 1976 Act has been impleaded as a party. The Excise Department which has been impleaded in the present case is merely carrying out its obligations under the law. 37. The contention is well-merited. The petitioner claims that the provisions of the Weights and Measures Act cant be applied to it. Yet, the authorities that could have answered this claim have not even been impleaded. Only the Union of India through the Ministry of Finance and the Assistant Commissioner of Central Excise, Faridabad are the parties. 38. No other point was raised. 39. In view of the above, we find no merit in this petition. It is, consequently, dismissed. However, in the circumstances of the case, the parties are left to bear their own costs.